Wendy's today reported first-quarter net income fell 83 percent from the
same period a year ago, which included an $18 million gain on the sale of an
The Dublin-based fast-food chain's adjusted earnings, which omit the one-time gain, met Wall Street expectations. Wendy's also raised its full-year earnings forecast because it expects to save $12 million in interest this year by refinancing its revolving debt.
Wendy's net income fell 82.7 percent to $2.1 million, or 1 cent a diluted share, in the first quarter.
Revenue rose 1.8 percent to $603.7 million from the first quarter last year.
Wendy's shares were down about 2 percent in morning trading.
An ongoing rebranding effort, which includes rebuilding or remodeling its stores, and a new value menu contributed to a 1 percent sales gain in the first quarter at restaurants open at least a year, said Emil Brolick, president and CEO, said in a written statement.
That increase from the year-ago quarter, while small, came despite unfavorable sales shifts related to holidays and bad weather in the just-ended quarter.
However, the company continues to face competition for its low-priced menu items as other fast-food companies beef up or add value menus.
"We have also seen a solid consumer response to the April introduction of our new Flatbread Grilled Chicken sandwiches, although the price-value component of our business continues to represent a challenge," Brolick said.
"Our solid first-quarter profitability increase was in line with our expectations," he said.
Wendy's has redesigned and rebuilt 86 of its company-owned stores and continues to expect to rebuild half of those restaurants by the end of 2015. The company's franchisees are beginning to adopt a three-tiered rebuilding program with the help of $10 million in incentives.
The company boosted its outlook for adjusted earnings per share this year to between 20 cents and 22 cents a share, up from between 18 cents and 20 cents a share. Consumer reaction to the company's rebuilt stores, which feature dramatic designs, digital menu boards and Wi-Fi bars, "has produced very positive traffic and sales growth," Brolick said.
Wendy's expects to save $20 million a year by refinancing its revolving debt. The company already is saving $30 million a year from a debt refinancing done last year.
Earlier this week, Wendy's said it had hired Kellogg veteran Todd Penegor as its chief financial officer to replace Stephen Hare, who expects to retire Sept. 1. Hare was CFO of Triarc Cos., which acquired Wendy's in 2007.
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